While there is no unanimous definition and interpretation of the term ‘entrepreneurship’ and an ‘entrepreneur’, the common understanding is coherent with the Timmons Model and the economic thinker Richard Cantillon respectively.
According to the model, successful entrepreneurship combines three vital factors – opportunities, time and resources (Scudder, 2011). In contrast, an entrepreneur is an economic agent that actively connects the customers with the producers by building a productive team (Scheid, 2013).
With this backdrop, in the following essay, the profiles of two well-known entrepreneurs are detailed, along with their stances on successful entrepreneurship. The rationale for the selection of these candidates is discussed and justified. The essay compares and analyses the two based on the entrepreneurship models followed by them.
Profile of the Entrepreneurs Selected
The two entrepreneurs selected to serve the purpose are – Jack Ma, a Chinese Entrepreneur and Richard Branson, a British Entrepreneur. Both entrepreneurs belong to two different industries and economic setups that make them worth a comparison. Forbes has listed them among the top billionaires. Details about their profiles are provided below:
Jack Ma, the founder of Alibaba Group which has a strong foothold in the online businesses, is the eighteenth richest man globally with a net worth of $29.7bn (Bloomberg, 2014). He founded the first online company in China – China Yellowpages in 1995. After heading an IT company for a year before 1999, he laid the foundational stone for Alibaba Group with Alibaba.com, a Chinese B2B portal. Later he developed and expanded the group to include Taobao Marketplace, Alibaba Cloud Computing, 1688.com, Alipay, AliExpress.com, eTao and Juhuasuan.
The B2B portals have a strong presence in China, with leading transactions that have forced eBay to exit its operations there. He has bagged many awards as an entrepreneur and philanthropist. After retiring as the CEO of Alibaba Group in 2013, he now is the Executive Chairman of the Group with a new vision to help more people make healthy and sustainable money. His growing interest in the conservation of nature has paved the way for him to become the Chairman of the Board of the Nature Conservancy (Braun, 2010).
Sir Richard Branson is the founder of the Virgin Group which comprises 400 plus companies (Anonymous, 2010). The seventh richest person in the UK, Sir Richard, has started his first venture with Student magazine, which was an overnight success. Next was a mail-order record store in 1970, later developed into a chain of stores called Virgin Megastores.
The Virgin Group gained momentum in the 1980s with the setup of Virgin Atlantic and the music label Virgin Records. The music label was impacted due to many strategic decisions. Virgin Mobile was launched in 1999 and Virgin Blue in 2000. In 2006, Virgin Mobile was sold, and Virgin Media was launched with a huge fanfare. Later in 2006, he formed Virgin Comics and Virgin Animation, followed by Virgin Health Bank in 2007. The Virgin Group is doing well in the transport with more mergers and acquisitions in the airlines in Europe, America and Australia, and railways. Further, Branson has also made the group’s presence felt in the beverage industry.
The sky is the limit for this entrepreneur who initiated the space tourism plan in alliance with the big shots of IT under the Virgin Galactic tag (Boyle, 2013). He has also served humanity with his passion for living life kingsize while taking up new challenges.
3. Rationality and Justification for Selection
The rationale for selecting the above two profiles is supported with the help of the entrepreneurship concepts and is justified using the different theories.
The rationale to choose these two candidates for the study of entrepreneurship is their highly dynamic profile. Both the entrepreneurs have made strategic decisions to keep re-investing the returns generated in the group by identifying the opportunities strategically. While the Virgin Group has a lot many (read as beyond 400) subsidiary companies, Alibaba Group has only nine. Yet, the founder of the latter group has a net worth five times that of Sir Richard Branson’s net worth, which is reportedly $4.9bn in 2014 (Forbes, 2014).
Virgin Group has a presence in most of the industries like telecommunication, entertainment, media, transport, B2C portals, tourism, etc. whereas Alibaba Group shows a focussed presence on the internet-based marketplaces. This implies that the way both these entrepreneurs think differs a lot. The entrepreneurship models adopted by each one of them also differ. Therefore, this makes them worthy of comparison to understand what entrepreneurial characteristics distinguish the two of them (Gulati, 2004).
Per the dynamic model for entrepreneurship as developed by (Buera, 2008), an individual always has to make a choice – earn a wage and invest in limited returns alternatives or work to invest in a unique new combination. The second alternate exhibits an entrepreneurial ability. Carrying out a unique variety of every investment distinguishes an entrepreneur from a mere business owner or manager (Schumpeter, 1936). On these grounds, the selection of the candidature is justified as both the entrepreneurs did not settle after establishing or converting an opportunity into a successful business unit (Bull & Willard, 1993).
Similarly, other entrepreneurship theories propose that entrepreneurs and entrepreneurship are characterised by various attributes like the personal traits (motivation, skills, expertise, ability, etc.), the external environment (team, Government, policy framework, economic impact, etc.), the speculative ability that helps in identification of opportunity and looks into the future, etc. (HopenHayn & Vereshchagina, 2005). The mix of these traits varies in every individual, so the new combinations tried out by the entrepreneurs vary.
As pointed by Sawney, Wolcott and Arroniz (Sawhney et al., 2006), innovation plays a small role in creating business value. Still, if the invention is mixed appropriately with these traits, it can lead to better and more successful entrepreneurship. The selection of both the entrepreneurs is justified based on the theories whereby each one has a distinct profile, has successfully ventured into new business opportunities, and has kept the stone rolling after that.
The values for the attributes mentioned above are analysed individually to understand the differences between the two profiles based on the entrepreneur theory discussed above. This would justify the selection assertively.
- Personal Traits: This comprises the attributes of motivation, personal skills, expertise and entrepreneurial ability. For Jack Ma, his inclination to the use internet served as a motivation (Shiying & Avery, 2009) whereas for Richard Branson his zest to live life to the fullest by taking on unprecedented challenges was the driving force. Jack Ma was keen on English, and he pursued his degree in that. He took up a management course in the year 2002. Branson was a weak student and gave up studies at the age of 16. Each has outstanding entrepreneurial abilities that can be endorsed by their profiles. This also is evident in the way the two groups emerged from their inception to date.
- External Environment: One has been set up in the Chinese economy, whereas the other is in the European economy. When they started, China was a developing economy, whereas England was a developed one. The Government bureaucratic systems for both the groups differed with the Chinese being a more centrally controlled economy whereas England had a free economy. Here, family support and financial availability also play a critical role.
- Speculative Ability: Jack Ma’s speculation for the choice of the sector, i.e. internet-based business was risky because e-commerce was still in its nascent stages. On the other hand, Richard started safe with records selling, growing it to a chain and then indulging in investments in various sectors.
- Future Outlook: Jack Ma’s outlook was focused on the growth of the internet based business portals with the product and technological innovation at every stage. For Richard Branson, the future outlook was wider than selling records or music labels alone. He ventured into many new sectors as an investor.
Considering the differences as pointed above, comparing the two leading high-profiled entrepreneurs at the global level is worthy and justified. It is ascertained that the combination of the above-discussed traits leads to making different choices of available opportunities. Conversion of these opportunities to businesses requires strategic decision making along with resources, time and other skills. The transformation process is different for every entrepreneur, and this is what underlines the enterprise’s business model.
Critical Comparison and Analytical Discussion
According to the profiles mentioned above, one thing is evident both the entrepreneurs have marked a niche in their respective businesses. However, the underlying business or entrepreneurship models reflected by their profiles differ. The models differ because the attributes that lead to entrepreneurship differ for both entrepreneurs.
The one thing that is common to both entrepreneurs is the corporate nature of their entrepreneurship, which can be coined as corporate entrepreneurship. Therefore, the critique of comparison is the underlying business model and the approach followed by each.
Corporate Entrepreneurship is defined as that entrepreneurial process wherein the teams in an enterprise plan, develop, launch, and manage any new business. This new business is generally distinct from that of the parent company; however, it leverages the parent company’s resources, market position, and assets (Wolcott & Lippitz, 2007). This type of structure is different from venture capital or a spinout, though.
According to Wolcott and Lippitz (2007), the four corporate entrepreneurship models are the opportunist, the enabler, the advocate, and the producer. Each of these models is characterised by the degree of resource authority and organisational ownership.
The organisational ownership dimension defines the one as the primary owner of the new business regarding responsibility and accountability. It can be focussed, i.e. restricted to an individual or group or diffused, i.e. spread across multiple groups in the organisation. The second dimension is resource authority. It states how finance is made available to the new business – from a dedicated pool or ad hoc. The initial model for every entrepreneur is the opportunist model, and so is the case with Jack Ma and Richard Branson.
However, later the new combinations identified for the critical three factors – opportunities, the team and resources reflect different models (or a mix of models) followed by each one. Jack Ma’s progress reflects the enabler model, whereas, for Richard Branson, a combination of opportunism and producer model is reflected. Before analysing why they map to these models and comparing them, let us briefly understand each of these corporate entrepreneurship models with the help of the examples provided in Figure 2.
- Opportunist Model: With diffused ownership in the new business and ad hoc resource allocation, organisations practising this model are open to experimentation and also have a great social network. Both of these aspects are mutually dependent. Mere experimentation without backup support can fail due to a lack of funds and vice versa. The best example is that of the medical device company called Zimmer. Despite the existence of purchasing power parity, the company has willingly taken up new research and developed the ideas for which people are ready to pay the premium as well.
- Advocate Model: Per this model, funding is not a problem, but ownership of the new business is a question. This is illustrated by the performance of the company DuPont. Despite a steady performance that leads to small margins in the business, the CEO was not satisfied with the growth and appointed an individual to take responsibility for the growth of a business unit. This worked positively for the conglomerate.
- Enabler Model: In this model, the company provides dedicated resources for new business ideas if they meet the company’s strategy. The ownership is diffused in the subgroups; however, these groups should meet the directives and guidelines for selecting the specific opportunities. If the criteria are met, then the group can undertake the opportunity, which is funded by the company. Here, entrepreneurship is practised at all the levels in the organisation under the directions of the company owner of- the course. This is evident in the business model of Google where human resources are helped to explore their entrepreneurial abilities in the interest of the company while utilising the company’s resources.
- Producer Model: In this model, corporate entrepreneurship is pursued by not only dedicating funds but also actively influencing the funding. This model’s approach is to opt for non-core business-related opportunities that lead to cross-unit collaborative opportunities for the in-house teams. This model targets cross-cutting or disruptive opportunities, which require dedicated and significant funding. Expertise in new business developments, reintegration into the existing system and internal decision authority are the success factors. IBM, Cargill and Motorola have used variants of this model.
In the case of Jack Ma, the underlying corporate entrepreneurship business model registers with the strategic goal of the Enabler Model, which seeks entrepreneurial abilities in teams and individuals. This is further supported by his background of inclination to the internet for innovative things and being the first one in many aspects of the internet businesses in China. He is not expertise in the program development, but he has superb seen-through into the future that has helped him and the group evolve to this stage. He has utilised the funds dedicatedly to foster different other business units, all related to the mainstream business of business-to-business marketplaces on the internet.
The Alibaba Group has essentially made its presence vital in e-commerce with a focussed development. Like the case of Google, Alibaba enables others to participate and grow along with the group. This is why it has been more comfortable for the entrepreneur to retire as the CEO of the Alibaba Group and take up other opportunities.
For the Virgin Group, it is evident that Sir Richard Branson has tried his hands on every possible business unit that was not related to the company’s core business. The group started with record selling and music label companies initially, considering the opportunist model. Later, Richard observed the different market opportunities as an investor and used dedicated funds to expand by establishing and acquiring new business units in entertainment, telecommunication, airlines, rails, media, beverages, etc. These were not necessarily correlated to the basic business unit.
This shows that the entrepreneur was actively looking out for various business opportunities with dedicated and focused funding. The business units were developed and later merged or divested based on the returns. Richard strategically invested in different new units or opportunities that helped him build a portfolio that could balance the returns generated for the parent company.
As the type of businesses being pursued by each entrepreneur differs, so is their business approach. Both the entrepreneurs have started from the ground level; they have opted for different companies based on their interests and motivation (Christensen & Raynor, 2003).
Jack Ma pursued his interest in utilising the internet as a marketplace for commerce and trade; Richard Branson pursued his interests to live life to the full by taking up different challenging opportunities and maintaining a well diverse profile. They chose such business models to help their businesses grow in the right direction according to their needs. To sustain an online business, the requirements differ from that of having physical stores. Understanding this difference in business requirements is essential.
Besides, the goals and vision of the entrepreneurs are other central directives in setting up the business model. Richard wanted variety, whereas Jack Ma wanted to be in the leading position.
Richard distributed his funds into multiple business units (which may or may not be related to other teams). Still, Jack dedicated his funds to the business units that were core to the mainstream business and fitted in the strategic frame of Alibaba. Therefore, Jack ventured into such business units that were supportive or expanded the group’s core business. On the other hand, Richard was not bothered about the correlation. He decided to mark his presence everywhere. This is evident in the types of business units he opted for under the Virgin Group.
AS the ideologies differ, the two dimensions that describe corporate entrepreneurship also differ. In the case of Jack Ma, the organisational ownership dimension is diffused, whereas the resource authority is focused. For Richard, however, the corporate ownership, as well as the resource authority both, remain focused or dedicated, respectively.
By the empirical studies and the above discussion, it can be concluded that the entrepreneurship model that is successful for a given entrepreneur might not be a hit for others as well. Besides, the degree of success attained in a new business unit by an entrepreneur might as well differ from the other. Multiple factors lead to the choice of a business model besides the very choice of the business sector itself. These factors are the characteristics of the entrepreneur like the personal traits, the external environment, speculative ability and outlook.
The choice of sector or sectors is primarily influenced by the personal trait factor – the entrepreneur’s purpose, motivation, and vision. The progress or growth path of converting entrepreneurship to corporate entrepreneurship requires speculative ability and outlook as well. The external environment governs the growth both positively and negatively. However, making things positive by combining the factors in the best possible way makes an entrepreneur.
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